Jakes Roof Repair has provided the following data concerning

Jake’s Roof Repair has provided the following data concerning its costs: Fixed Cost per Month Cost per Repair-Hour Wages and salaries $ 20,600 $ 15.00 Parts and supplies $ 7.40 Equipment depreciation $ 2,730 $ 0.40 Truck operating expenses $ 5,770 $ 1.70 Rent $ 4,610 Administrative expenses $ 3,880 $ 0.60 For example, wages and salaries should be $20,600 plus $15.00 per repair-hour. The company expected to work 2,900 repair-hours in May, but actually worked 2,800 repair-hours. The company expects its sales to be $47.00 per repair-hour. Required: Compute the company’s activity variances for May. (Indicate the effect of each variance by selecting \"F\" for favorable, \"U\" for unfavorable, and \"None\" for no effect (i.e., zero variance). Input all amounts as positive values.)

Solution

Activity variance for May: Planning Budget Flexible Budget Activity Variances Repair hours (x) 2900 2800 Revenue ($47*x) 136300 131600 4700 U Expenses: Wages and salaries (20600+15x) 64100 62600 1500 F Parts and supplies (7.40*X) 21460 20720 740 F Equipment depreciation (2730+0.40x) 3890 3850 40 F Truck operating expense (5770+1.70*x) 10700 10530 170 F Rent 4610 4610 0 Administrative expenses (3880+0.60x) 5620 5560 60 F Total expenses 110380 107870 2510 F Net operating income 25920 23730 2190 U